Market Analysis Of Graphite Electrode Industry

1.Market Analysis of Graphite Electrode Industry

According to a survey by Linzhang Xinhui Carbon, the global graphite electrode (Graphite Electrode) is currently the largest graphite electrode market in the Asia-Pacific region, accounting for about 48% of the market share, followed by Europe and North America. In 2020, the global graphite electrode market will reach 36.9 billion yuan, and it is expected to reach 47.5 billion yuan in 2027, with a compound annual growth rate (CAGR) of 3.5%.

From 2014 to 2019, global graphite electrode production (excluding China) decreased from 800,000 tons to 710,000 tons, with a compound annual growth rate of -2.4%. China's graphite electrode production decreased from 570,000 tons in 2014 to 500,000 tons in 2016. Production in China has picked up since 2017 and reached 800,000 tons in 2019.

2. Global graphite electrode prices fluctuate greatly

From 2014 to 2016, due to the weakening of downstream demand, the global graphite electrode market went down, and the price of graphite electrodes remained at a low level. As the main raw material for graphite electrodes, the price of needle coke fell to US$562.2 per ton in 2016. Since China is a net importer of needle coke, demand from China greatly affects the price of needle coke outside China. As graphite electrode manufacturers cleared their production capacity due to falling below the manufacturing cost line in 2016, social inventory reached a low point. In 2017, the policy side canceled the intermediate frequency furnace for strip steel, and a large amount of scrap iron flowed into the electric furnace of steel factories. As a result, China's graphite electrode industry fell in 2017 Demand surged in the second half of the year. Due to the increased demand for graphite electrodes, the price of needle coke rose sharply in 2017 and reached US$3,769.9 per ton in 2019, an increase of 5.7 times compared to 2016.

In recent years, the support and guidance of the domestic policy side for the replacement of converter steelmaking by electric arc furnace short-process steelmaking has promoted the increase in the demand for graphite electrodes in China's steel industry. The recovery of the global electric arc furnace steel market since 2017 has led to a shortage of global graphite electrode supply. Demand for graphite electrodes outside of China rose sharply in 2017, and prices reached their highest point. Since then, due to excessive investment, production and purchase, the market has excessive inventory, and the average selling price of graphite electrodes has plummeted in 2019. In 2019, the price of ultra-high power graphite electrodes stabilized at $8824.0 per ton, but remained higher than the historical price before 2016.

In the first half of 2020, the new crown epidemic led to a further decline in the average selling price of graphite electrodes. The price of domestic needle coke fell from 8,000 yuan/ton to 4,500 yuan/ton at the end of August, a drop of 43.75%. The production cost of domestic needle coke is 5,000-6,000 yuan/ton, and most manufacturers are below the break-even point. With the recovery of the economy, the production and sales of graphite electrodes in China have improved since August, and the operating rate of electric furnace steel has remained at 65%. Steel mills have picked up their enthusiasm for purchasing graphite electrodes, and inquiries in the export market have gradually increased. The price of graphite electrodes has also picked up since September 2020. The price of graphite electrodes has generally increased by 500-1500 yuan/ton, and the export price has even increased substantially.

Since the beginning of 2021, due to the impact of the epidemic in Hebei, most graphite electrode factories have stopped production, and transportation vehicles have also been strictly controlled, and local graphite electrodes cannot be traded normally. In the domestic graphite electrode market, the prices of ordinary and high-power products are rising. The mainstream price of UHP450mm with 30% needle coke content in the market is quoted at 15,000-15,500 yuan/ton, and the mainstream price of UHP600mm specification is quoted at 18,500-19,500 yuan/ton, with an increase of 500-2000 yuan / ton. The rise in raw material prices also supports the price of graphite electrodes. At present, the price of domestic coal-based needle coke is about 7,000 yuan, that of oil-based coke is about 7,800 yuan, and that of imported graphite electrodes is about 1,500 US dollars. The supplies of some mainstream manufacturers in February have already been ordered. Due to the intensive maintenance of major raw material suppliers at home and abroad in April, it is expected that graphite electrodes will still have room to rise in the first half of 2021. However, as costs increase, the demand for downstream electric furnace smelting may weaken. It is expected that the price of graphite electrodes will remain stable in the second half of the year.

3.Development Trend Analysis of Graphite Electrode Industry
Except for China, the United States, Japan, South Korea and other major steel-producing countries in the world are mainly electric furnace steelmaking, and have a large demand for graphite electrodes, while China's graphite electrode production capacity accounts for more than 50% of the global production capacity, which makes China a net exporter of graphite electrodes. country. In 2018, China's graphite electrode export volume reached 287,000 tons, a year-on-year increase of 21.11%, maintaining a growth trend and a substantial increase for three consecutive years. It is estimated that China's graphite electrode export volume is expected to increase to 398,000 tons by 2023, with a compound annual growth rate of 5.5 %. Thanks to the improvement of the technical level of the industry, Chinese graphite electrode products have gradually been recognized and accepted by overseas customers, and the overseas sales revenue of Chinese graphite electrode companies has increased significantly.

With the continuous improvement of the technical level and product competitiveness of China's graphite electrode industry, China's graphite electrodes will be more and more recognized and trusted by overseas customers, and the export volume of graphite electrodes is expected to further increase, which will become a key factor driving the digestion of China's graphite electrode production.
4.The development of ultra-high power electrodes is the future trend

From the perspective of industry policy environment, the China Carbon Industry Association has released the "T/ZGTS001-2019 Carbon Industry Air Pollution Emission Standard" in March 2019, which will be officially implemented on September 1, 2019. The release of this standard means that the industry's environmental protection requirements are becoming stricter, which will put pressure on the development of the industry.

From the perspective of industry product development trends, industry insiders pointed out that the development of graphite electrodes to ultra-high power electrodes is the future trend. As the demand for ultra-high power electric arc furnaces increases, ultra-high power graphite electrodes will also gain further room for development. Compared with ordinary power electric arc furnaces, large-capacity ultra-high-power electric arc furnaces have higher labor efficiency and relatively lower overall costs. When the power of the electric arc furnace increases, it also puts forward higher requirements for the maximum allowable current of the graphite electrode for the electric arc furnace, and the maximum allowable current of the graphite electrode directly depends on the diameter of the graphite electrode.

The national industrial policy has a clear direction, and the development of short-process steelmaking is the general trend. Electric furnace steel (short-process steelmaking) usually refers to the steel produced by electric arc furnace. Its high efficiency, relatively small pollution and relatively low cost are in line with the national environmental protection policy. As one of the main materials for electric arc furnaces, ultra-high-power graphite electrodes will inevitably increase their demand driven by this demand.